Two Roadblocks to U.S. Energy Independence

In a moment when nothing makes us happy, we got a nice feel-good story today, that the IEA, the International Energy agency, says we will be energy self-sufficient in 2020 and overtake the Saudis as the biggest exporter of oil in 2030.

To which I say, oh, please, we will never ever again be nationally self-sufficient, but we could be continental self-sufficient, and that in itself would be a big deal.

But we can only do it in two ways: 1.) Choosing to view the Canadian tar sands oil as regular oil that can be refined cleanly, as Honeywell (HON), which makes the refining chemicals, says it can be, and 2.) we switch to natural gas surface fuel.

I don't have great hopes for either under President Obama, and that means you are going to have start the sufficiency drive in 2017, which doesn't give you a whole heck of a lot of time.

First, the anti-fossil-fuel nonprofits were important to Obama's election. They have no desire to allow Canadian heavy oil to come into the States. I think they are powerful enough to stop it, and that means we will continue to import oil from Venezuela and the Middle East. OPEC wins.

Second, although I had a very optimistic David Demurs from Westport Innovations (WPRT) on the show tonight, the premier nat-gas engine maker, it is very clear that the demand for nat gas engines isn't up to snuff -- hence the missed quarter -- in part because the infrastructure is just not there to pump. Until it is, nat-gas engines remain ultra-niche.

We have a lot more oil than people think we do here in the U.S. But it is mostly contained in the Bakken and Eagle Ford. I have been saying that both could be as big as Prudhoe Bay.

But what we really have excess of, more than anywhere in the world, is natural gas, Unless you can turn natural gas into gasoline, you cannot be as hopeful as the IEA is. That's because the big users of imported oil are trucks. They use one-quarter of our oil. Unless the government can force them to use compressed natural gas (CNG) or liquefied natural gas (LNG), they are not going to switch. Why bother? Sure, the savings are great, but the engines are expensive, and how many places can you really fill up at?

So, breathe a sigh of relief, Get excited about energy self-sufficiency, but remember it can only happen with Canadian crude and CNG/LNG, and right now none of those has the support of the U.S. government.

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